Property Tax Basics

BC Property Transfer Tax (PTT)

The BC provincial government collects a Property Transfer Tax on sales of real estate. The tax is applicaple to both new and resale homes. The tax is calculated at the rate of 1% on the first $200,000. of value plus 2% on the remaining balance up to $2,000,000 plus 3% on the remainder thereafter. Although the BC Real Estate Association (BCREA) has lobbied hard for changes to and outright abolition of the PTT, the provincial government continues to resist any major changes to this significant and growing source of tax revenue.

Ministry of
Finance Tax Information Sheet ISSUED: July 2016 REVISED: July 27, 2016
Information Sheet 2016-006 gov.bc.ca/propertytransfertax PO Box 9427 Stn Prov
Gov Victoria BC V8W 9V1 Additional Property Transfer Tax on Residential
Property Transfers to Foreign Entities in the Greater Vancouver Regional
District Property Transfer Tax Act Latest Revision: The revision bar ( )
identifies changes to the previous version of this information sheet dated July
2016. For a summary of the changes, see Latest Revision on Page 4. Effective
August 2, 2016, an additional property transfer tax applies to residential
property transfers to foreign entities in the Greater Vancouver Regional
District. The Greater Vancouver Regional District includes Anmore, Belcarra,
Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay,
Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows,
Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White
Rock and Electoral Area A. The additional tax does not apply to properties
located on Tsawwassen First Nation lands. The additional tax applies on all
applicable transfers registered with the Land Title Office on or after August
2, 2016, regardless of when the contract of purchase and sale was entered into.
Foreign Entities Foreign entities are transferees that are foreign nationals,
foreign corporations or taxable trustees. Foreign nationals are transferees who
are not Canadian citizens or permanent residents, including stateless persons.

Foreign corporations
are transferees that are corporations: • not incorporated in Canada or •
incorporated in Canada, but controlled in whole or in part by a foreign
national or other foreign corporation, unless the shares of the corporation are
listed on a Canadian stock exchange Taxable trustees are trustees that are a
foreign national or foreign corporation, or a beneficiary of a trust that is a
foreign national or foreign corporation. Applying the Additional Tax The
additional tax on property transfers to foreign entities is 15% of the fair
market value of the foreign entity’s proportionate share of a residential
property located in whole or in part in the Greater Vancouver Regional
District, excluding Tsawwassen First Nation lands. This tax applies in addition
to the general property transfer tax. The additional tax does not apply to
non-residential property. The value of the residential portion of a transfer is
calculated in the same way as for the property transfer tax. The additional tax
applies on the foreign entity’s proportionate share of any applicable
residential property transfer, even when the transaction may normally be exempt
from property transfer tax. This includes transactions such as: • a transfer
between related individuals • a transfer resulting from an amalgamation • a
transfer to a surviving joint tenant • a transfer where the transferee is or
becomes a trustee in relation to the property, even if the trust does not
change The additional tax does not apply to trusts that are mutual fund trusts,
real estate investment trusts or specified investment flow-through trusts.
Filing and Paying the Additional Tax Filing the Return Foreign entities
registering a transfer, or their legal representative, must file an Additional
Property Transfer Tax Return (FIN 532). The return must be filed at the time
the property transfer is registered with the Land Title Office. Filing
instruction can be found on the return, or at gov.bc.ca/propertytransfertax on
the File Your Taxes page

Paying the
Additional Tax The additional tax must be paid with the general property
transfer tax at the time the property transfer is registered with the Land
Title Office. Each transferee is jointly and severally liable for the
additional tax payable. If one transferee does not pay the required additional
tax, the other transferees, including Canadians, must pay that transferee’s
share of the additional tax payable. Tax Avoidance All property transfer
transactions are subject to audit and all additional property transfer tax
returns will be reviewed and verified. The audit period is six years from the
date the transfer is registered at the Land Title Office. Where transactions
involve Canadian citizens and permanent residents their identity must be
verified using official government issued identification. The social insurance
number (SIN) must be collected and verified to be that of the transferee by
viewing the SIN card and comparing the name or by viewing one of the following:
• T4 Statement of Remuneration Paid (slip) • Canada Revenue Agency Notice of
Assessment Invalid social insurance numbers or other discrepancies on a return
will lead to an audit and investigation of the transaction. Anti-avoidance
provisions exist and will be enforced to ensure all foreign entities report and
pay the additional tax as required, including examining circumstances where
Canadians hold property in trust for a foreign entity or are trustees where a
beneficiary may be a foreign entity. Failure to pay the additional tax as
required or purposely completing the general or additional property transfer
tax return with incorrect or misleading information may result in a penalty of
the unpaid tax plus interest and a fine of $200,000 for corporations or
$100,000 for individuals and/or up to two years in prison. The penalties apply
to anyone who participates in tax avoidance. Property transfers will be
monitored for compliance and the province will follow up with those businesses
or individuals filing incomplete or incorrect general or additional property
transfer tax returns.

Further
Information Online: gov.bc.ca/propertytransfertax Toll free in BC: 1 888
355-2700 Email: pttenq@gov.bc.ca Subscribe to our What's New page to receive
email updates when information changes. The information in this notice is for
your convenience and guidance and is not a replacement for the legislation.
Latest Revision July 27, 2016 §
Clarified that the identity of Canadian citizens and permanent residents must
be verified using official government issued identification. § Clarified the social
insurance number (SIN) must be collected and verified to be that of the
transferee by viewing the SIN card and comparing the name or by viewing one of
the following: o T4 Statement of Remuneration Paid (slip) o Canada Revenue
Agency Notice of Assessment

PTT Exemptions For First-Time Home Buyers

The First-Time Home Buyers Program (FTHB) was introduced in March 1994, updated in June 2005 and again in February 2008 to provide exemptions to individuals purchasing their first home. First time Buyers can now buy a home priced up to $475,000 and not pay the Property Transfer Tax (PTT). The new rules also provide a proportional tax exemption for home priced between $475,000 to $500,000. At $500,000 and above the rebate is nil.

Qualifying buyers ofnew homes may be exempt if the purchase price of their home is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above there's no rebate.

Changes to Financing Restrictions

First-time home Buyers can now pay down their mortgages by any amount in the first year of ownership without being disqualified from the exemption. Gone are the PTT financing rules that required Buyers to have a minimum 70% mortgage and registered financing to qualify for the exemption.

Program Eligibility Restricted

The program carries a number of restrictions based on the value of the property purchased.

BC Provincial Homeowner Grant

The BC provincial government announced in January 2008 the threshold at which the Home Owner Grant is phased out is increased to $1,050,000 from the previous level of $950,000. In practical terms, over 95% of BC homeowners remain eligible for the full grant.

Properties valued over $1,050,000 will have the grant reduced by $5 for every $1,000 in assessed value in excess of the new threshold. The basic grant is eliminated entirely for properties valued at $1,164,00 and higher.

GST/HST Rebate on New Housing

The Federal government offers a GST/HST rebate program for purchases of New Housing. The program can provide tax relief of up to 36% of the GST paid on the purchase of a New Home. There are a number of restrictions and qualifications that determine eligibility. Click on the link below for details.